Monday, March 09, 2015

Some Supreme Court Justices Cite 2012 Argument Against Health Care Law as Defense for It Now

WASHINGTON — In 2012, the Supreme Court declared that Congress had put “a gun to the head” of states by pressuring them to expand Medicaid, and it said that such “economic dragooning” of the states violated federalism principles embedded in the Constitution.

Now, in a separate case, comments by several justices indicate that they could uphold a pillar of the Affordable Care Act — insurance subsidies for millions of lower-income people — by invoking those same principles.

In 2012, the court said it would be unconstitutional for Congress to cut off all Medicaid payments to states that refused to expand eligibility, and this ruling instantly transformed the expansion of Medicaid into a state option.

That precedent echoed through oral arguments last week before the court; justices again expressed respect for federalism and state sovereignty.

Under the health care law, Congress gave states a choice: They could establish and operate their own competitive insurance marketplaces, or they could rely on one established by the federal government. It was, several justices said, inconceivable that Congress would then punish states that used the federal exchange by denying insurance subsidies to their residents.

Justice Anthony M. Kennedy suggested that such a choice could coerce states in a potentially unconstitutional way. Under the theory favored by critics of the health care law, Justice Kennedy said last week, “the states are being told either create your own exchange, or we’ll send your insurance market into a death spiral,” and “the cost of insurance will be sky high.”

Mark H. Gallant, a health lawyer at Cozen O’Connor in Philadelphia, said: “Justice Kennedy’s take on this case was a brilliant touch. He used the plaintiffs’ own argument against them to suggest that it would be unconstitutionally coercive if Congress made the subsidies depend on a state’s decision to establish an exchange.”

Plaintiffs in the case, King v. Burwell, say the Affordable Care Act authorizes subsidies only in states that created their own insurance exchanges.

Justice Antonin Scalia said it was “gobbledygook” for the Obama administration to suggest that an exchange set up by the federal government “qualifies as an exchange established by the state.” When the language of the law is clear and unambiguous, he said, the court cannot twist the words to avoid “untoward consequences.”

And Justice Samuel A. Alito Jr. said the court could delay the impact of its ruling if the consequences were as disruptive as the administration said.

But the Obama administration argues that the subsidies are available in all states, including more than 30 that refused to establish exchanges and rely on the federal marketplace. Without the subsidies, it says, many people would be unable to afford insurance, and healthier consumers would go without coverage, leaving insurers with a sicker, more expensive pool of customers.

The Affordable Care Act has begun reducing the number of uninsured in two main ways: by expanding Medicaid and by providing tax credits to subsidize private insurance purchased through the public exchanges. The court, which focused on Medicaid three years ago, is now examining the subsidies.

Justice Sonia Sotomayor told the plaintiffs’ lawyer, Michael A. Carvin, that if the court accepted his argument, it would be “intruding on the federal-state relationship, because then the states are going to be coerced into establishing their own exchanges.”

And Justice Elena Kagan said Congress had not warned states of the consequences if they chose to use the federal exchange. In interpreting statutes, Justice Kagan said, the court presumes that “Congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly.”

For decades, more conservative justices have emphasized respect for state sovereignty. The court often uses “basic principles of federalism embodied in the Constitution to resolve ambiguity in a federal statute,” Chief Justice John G. Roberts Jr. said in his opinion for the court in an unrelated case nine months ago.

The oral arguments also showed how the court, in the digital age, could be influenced by a flood of research, analysis and commentary from bloggers, scholars and advocates forecasting dire consequences if insurance subsidies end. More than 20 legal briefs have conveyed those concerns to the court, citing studies by groups like the Commonwealth Fund, the Urban Institute, the Kaiser Family Foundation, the RAND Corporation and Families USA.

“In the last six weeks,” said Abbe R. Gluck, a law professor at Yale, “people finally woke up and became aware of the drastic real-world consequences.”

When ruling on appeals, judges typically make decisions by closely reading the law and applying it to the facts of a case, as revealed in a trial court. But in the subsidies case, supporters of the health care law found a way to bring their predictions to the Supreme Court justices’ attention.

The government argued that Congress could not have imposed such drastic consequences on states without discussing the impact and without giving clear, explicit notice to the states.

“If that was really the plan, then the consequence for the states would be in neon lights in this statute,” said Solicitor General Donald B. Verrilli Jr.

Justice Kennedy has long been a protector of the states. They need clear notice of the conditions attached to federal funds so they can “guard against excessive federal intrusion into state affairs and be vigilant in policing the boundaries of federal power,” he wrote in 1999.

The Affordable Care Act expanded federal power, but preserved a large role for states.

Mr. Carvin, the plaintiffs’ lawyer, said the law had offered an irresistible incentive — “billions of free federal dollars” in subsidies — as an inducement for states to set up exchanges.